What is the present value of $300 received at the beginning of each year for five years? Assume that the first payment is not received until the beginning of the third year (thus the last payment is received at the beginning of the seventh year). Use a 10% discount rate, and round your answer to the nearest $1.00.
A) $1,137
B) $854
C) $940
D) $1,257

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Quizplus · Accepted Answer

The present value of an annuity due can be calculated by first finding the present value of the annuity and then adjusting for the fact that payments are received at the beginning of each period. The present value of the annuity is calculated for years 3 to 7, and then discounted back to the present value at year 0.

What Is the Present Value of $300 Received at the Beginning